7 ways to save big on your mortgage

Buying a home requires the biggest financial commitment most people will ever make.

Investors, of course, can multiple this obligation by one, two or many times, but they also have the advantage of having a tenant paying rent on their properties to help cover their mortgage repayments.

The thing is, far too many people make simple mistakes when it comes to their mortgages.

But the problem with simple mortgage mistakes is that it can cost you an enormous amount of money over the life of your loans.

And that money is far better in your pack pocket or being used to generate wealth!

The good news is there are number of ways that can help you save big on your mortgage.

1. Use a budget

If you want to save money, you must spend less than you earn, right?

Only when you can see your true money position can you be responsible for the desired outcome – so you need to devise a budget and keep to it!

Most people, including many high income earners, don’t understand that they can’t live beyond your means yet they expect things to be different despite continually overspending.

For example, as a way to save money that could be more effectively used on your mortgage, why not take your shopping list with pre-planned meals and ingredients with you when shopping for groceries and never go shopping when you’re hungry.

2. Keep your savings on your mortgage

It’s astounding how many families have one or more savings accounts while also paying a mortgage.

Why pay tax on interest earned from these accounts (even if it’s only a small amount) when you could be offsetting the higher interest cost of your mortgage?

Technology has allowed us to have more control and flexibility over our bank accounts than ever before.

So, instead of squirreling your savings in a separate account, why not save additional funds on your mortgage account where it can reduce your interest repayments while still being available for you to access when you want?

3. Put your income/s in your offset account

While your income is resting in an offset account, you are saving interest every single day because interest is charged monthly but calculated daily.

Even if you spend the majority of your income by month’s end (which you shouldn’t if you budget!) you can still pay your mortgage off quicker by depositing your income directly into an offset account thereby lowering your interest payments.

4. Pay yourself first

If, like many Australian families, you are struggling to meet your financial commitments every month or your expenses fluctuate from month to month, I suggest you pay yourself 10 per cent of your income before you pay anything else.

It’s an old but wise maxim to pay yourself (in your savings or offset account) at least 10 per cent of your income.

Then live off the rest.

This creates forced savings as well as some interest cost savings, with this extra money accruing if you allow it too.

5. Review your costs periodically

Once you know where you are at and how much you are spending, it’s easy to compare and lower your expenses.

is a Property Strategist with an accounting background and over 30 years’ Commercial Banking experience. She is a passionate property investor who enjoys helping her clients create wealth through property investment using Metropole’s strategic approach.Visit www.MelbourneBuyersAgent.com.au

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PropertyUpdate.com.au is Australia's leading property investment wealth creation website with tips, advice and strategies from leading real estate investment experts. Featuring topics like property investment, property development (helping you understand the process), negative gearing and finance (so you can borrow more from the banks), property tax (allowing you to structure for legal tax deductions and asset protections), negotiation, property management (assisting landlords and tenants understand their right responsibilities), commercial property (for experienced property investment individuals), personal development and the psychology of property investment success.